Sbi Home Fin Suffers Rs 7cr Loss

Stung by large non-performing assets (NPAs) of the corporate sector and a Rs 7 crore loss in 1997-98, SBI Home Finance, the State Bank of India's housing finance arm, has decided to concentrate on advances to individuals in the current year.

Sudarshan Kumar, executive director, SBI Home Finance, told Business Standard that the company would continue with the policy of no-advance to the corporate sector which was pursued in the previous year as well.

The corporate sector NPA in 1997-98 has reached the staggering figure of 15 per cent even after writing off Rs 5 crore advance to CRB Caps in 1996-97.

Kumar admitted that the general economic slowdown and poor performance by the corporate sector have affected their company as well. SBI Home Finance has, in the circumstances, suffered a loss of Rs 7 crore in the year under review. This was against the marginal profit of Rs 1.42 crore earned by the company in 1996-97.

Against this background the board of directors , which met here yesterday, set a new direction for the company. SBI Home Finance will not advance any loan to the corporate sector, but it will target the retail business through increased advances to the individuals. The target advances under this heading has been set at more than Rs 100 crore.

Moreover, the company will find new avenues to get low-cost finance. SBI Home Finance may renew its fund resourcing from National Housing Bank (NHB) which it did not seek in the past two years.

Kumar said the individual sector has shown commendable performance to the utilisation of the fund advanced to them. The NPA here was only 2.5 per cent against 15 per cent by the corporate sector. SBI Home Finance has now set the target of lowering this NPA to 1 per cent to the individuals.

The housing company is also keen to narrow down its exposure to the corporate sector which prevails now at 40 per cent. Kumar has, however, made it clear that recovery from the corporate sector would not take the conventional legal route.

The new strategy envisages rescheduling, re-phasing and also restructuring of the payment obligations of the corporate sector.

This policy will be pursued on the lines of the financial institutions of the country.

SBI Home Finance will `go deep into the financial positions of the corporates' and allow them reasonable time to service and liquidate their debts. This will of course be limited to those who have the possibility of recovery.

Total disbursement of SBI Home Finance stands at Rs 975 crore. In the present scenario, SBI Home Finance has decided to decelerate deposit growth which was Rs 120 crore in 1997-98.